PBoC Will Create Cryptocurrency to Meet Libra Challenge

The release of the Libra white paper has brought the participants in the traditional financial technology field to the enemy, and has also promoted global geopolitical competition. The US Congress expressed opposition. The SEC decided to relax the regulatory barriers to cryptocurrencies, speed up the global rules for cryptocurrency regulation, and China is releasing the layout signal to create cryptocurrencies.

Recently, the People’s Bank of China (Branch in Shenzhen) said that the trade blockchain platform created by the People’s Bank of China has processed more than 30 billion CNY (about 4.36 billion US dollars) of foreign exchange transactions. The platform has access to 28 banks and 483 outlets. The use of blockchain technology avoids slow paper tracking between multiple receiving departments in a traditional banking environment. Next, the platform will accelerate ecological construction and nationwide promotion, and is ready to interface with similar platforms such as HKICL to provide more convenient trade financing services. In the future, the platform will connect to more similar platforms of national and international organizations.

According to South China Morning Post, Wang Xin, director of the Research Bureau of the People’s Bank of China, expressed concern that a group of private companies of global nature could control a digital currency that could change the global financial situation. Libra may change the rules of the game globally, which is dangerous for China.

“If the digital currency is closely related to the dollar, it may produce a situation where the sovereign currency coexists with the dollar-centric digital currency. But in essence there will be a boss, the dollar and the US. If so, it will bring one series of economic, financial and even international political consequences.”

China is ready to deal with digital warfare

To offset Libra’s influence, China is accelerating efforts to create a possible official cryptocurrency. Wang Xin reveals that the Chinese government is launching a digital finance research program consisting of several famous universities in China, including Peking University, Renmin University of China, Zhejiang University and Shanghai Jiao Tong University.

Libra is not only dangerous for China. Japan is also worried about its influence. Even some members of the US Congress expressed their concerns and asked Mark Zuckerberg’s company to suspend its development.

There is a situation we want to avoid: after the end of Bretton Woods system, Libra becomes a new lever for dollar power, and the United States will repeatedly control world finance.

The British action is also very fast. The FCA approved a cryptocurrency hedge fund. This means that whether it is a complicity to participate in the new currency rights or a new financial order, in the eyes of British government agencies, cryptocurrency becomes easier to understand.

In the face of the new currency war threat, China has never stagnated. On July 4, the People’s Bank of China (Branch in Shenzhen) and the State Administration of Taxation Shenzhen Municipal Taxation Bureau finalized the cooperation strategy agreement. The agreement is primarily to ensure simple and automated tax filing of trade finance through the central bank’s blockchain platform.

On July 9, Zhou Xiaochuan, the former president of the People’s Bank of China, once again voiced, “Libra represents the trend of digital currency, and China should plan ahead. “After the global financial crisis in 2008, China continued to narrow the gap with the United States. One important reason is that our financial system is relatively sound. For this reason, we should investigate potential risks ahead of time, have forward-looking preparations for policy research, and minimize our weaknesses in possible crises.

According to a report by Deloitte at the end of June, as many as 73% of Chinese companies believe that blockchain technology is the five strategic priorities.

Embracing the blockchain is indeed a major move for the central banks of the world’s major countries and can serve as a model for many emerging economies in the near future.

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